Ecuador Government May Acquire Noble Power Plant

By Heather Walsh

Feb. 10 (Bloomberg) -- Ecuador said it may buy a power plant from a unit of the U.S.’s Noble Energy Inc. as the government broadens state control of domestic energy production.

The government is in talks to acquire the natural gas- powered Machala plant on the nation’s Pacific coast, said Galo Borja, minister of strategic industries coordination. He declined to discuss financial terms of a possible transaction.

“They have proposed the sale and we are interested,” Borja said in a telephone interview yesterday from Guayaquil, Ecuador. “It will be negotiated.”

President Rafael Correa is tightening state control over the nation’s oil, natural gas and electricity production since taking office in 2007. Last month, the government said it began the process to cancel the natural-gas exploration and production contract belonging to Noble Energy’s EDC Ecuador Ltd. unit.

Gas from Noble’s field supplies Machala. The plant, which began production in 2002, is one of the nation’s lowest-cost producers, according to Houston-based Noble’s Web site. The government may more than triple Machala’s generating capacity, Borja said.

The government discussed a sale of the plant with officials from EDC Ecuador within the last two weeks, Borja said.

Noble Chief Executive Officer Charles Davidson said last year that the company was interested in selling the generation unit. David Larson, a spokesman for Noble, declined to comment today by telephone from Houston.

Production Capacity

Machala has capacity to produce 130 megawatts of power. Ecuador had generating capacity of 5,270 megawatts as of last June, according to data on the Web site of the state-run National Electricity Council.

The government is seeking to expand the Machala plant after a drought cut Ecuador’s hydroelectric power last year, leading to energy rationing that ended in January.

The outages probably cost the nation about $1 billion in lost factory output, Ramiro Crespo, president of Quito-based brokerage Analytica Securities CA Casa de Valores, said yesterday.

Noble Energy slid 1.5 percent to $73.35 in New York Stock Exchange composite trading at 10:25 a.m. New York time.